Cost of living touches 5-year high as inflation breaks gov't targets at 7.9% in June

The cost of living in the country has hit a five-year high as June’s inflation print comes in at 7.9 per cent from 7.1 per cent in May according to the latest government statistics.

The new data from the Kenya National Bureau of Statistics (KNBS) mirrors the outcome of higher food and fuel prices over recent months which has left Kenyans with sticker-price shocks as they purchase essential goods.

“The rise in inflation was mainly due to increase in prices in commodities under food and non-alcoholic beverages, household equipment and routine household maintenance, transport and energy,” KNBS stated on Thursday.

In June, food prices led in the cost surge as items in the category posted a mean increase of 13.8 per cent in costs year over year.

Transport and energy costs were meanwhile up by 7.1 and 6.8 per cent respectively on the backdrop of higher fuel prices after an upward review in maximum pump prices on June 14.

Cooking oil (salad) posted the largest increase in costs at 51.7 per cent from last year with a litre averaging Ksh.387.98 from Ksh.255.83 last June.

A two-kilogram packet of wheat flour meanwhile averaged Ksh.186.90 this month in contrast to Ksh.129.58 last year and Ksh.165.89 in May.

A 400 gram loaf of white bread meanwhile now costs Ksh.60.81 on average from Ksh.58.15 in May and Ksh.54.11 last year.

Other food commodities to post increases in the cycle include carrots, fresh packaged cow milk, beans and green grams.

The prices of avocado, potatoes and onions however cooled off month over month from May to register marginal decreases in prices.

Petrol, diesel and kerosene prices meanwhile rose by six, 6.8 and 7.5 per cent respectively on June 14 sending the average cost of petroleum per litre to Ksh.159.94, Ksh.140.91 and Ksh.128.86.

The rate of inflation is now in breach of the government’s target of 2.5 to 7.5 per cent which is targeted and pursued to maintain stability in prices in the domestic market.

The breach of the upper ceiling is expected to prompt fiscal and monetary responses by the government which could for instance see the Central Bank of Kenya (CBK) raise interest rates further to contain any demand-driven pressure on prices.

In May, the reserve bank raised interest rates for the first time in nearly seven years to set the benchmark interest rate at 7.5 from seven per cent.

Inflation last breached the upper limit in June of 2017 (9.21 per cent) while equalling the ceiling in July of the same year (7.47%).